Dáil Éireann debate -
Thursday, 8 May 1958

Vol. 167 No. 12

Industrial Development (Encouragement of External Investment) Bill, 1957—Report Stage.

Minister for Industry and Commerce (Mr. S. Lemass)

I move amendment No. 1:—

In page 3, to delete Section 2, lines 7 to 27, and substitute the following two sections:—

2.—For the purposes of this Act each of the following shall be a manufacturing process—

(a) the making, by the use of mechanical power, of a commodity,

(b) the altering, by the use of mechanical power, of a commodity,

(c) the ornamenting, by the use of mechanical power, of a commodity,

(d) the finishing, by the use of mechanical power, of a commodity,

(e) the adapting for sale, by the use of mechanical power, of a commodity.

3.—(1) Wherever the Minister is of opinion that a particular commodity is either not being manufactured in the State or not being manufactured in the State to a substantial extent, he may by Order declare that such commodity shall be an excepted commodity for the purposes of this Act.

(2) Where the Minister makes an Order under sub-section (1) of this section, then the word "commodity" shall, in Section 2 of this Act and in any section of this Act subsequent to this section, be construed as excluding the commodity to which the Order relates.

(3) Whenever the Minister makes an Order under sub-section (1) of this section, notice of the making of the Order (which notice shall contain particulars of the commodity to which the Order relates) shall be laid before each House of the Oireachtas as soon as may be after the Order is made.

During the course of the discussion on the Committee Stage Deputy McGilligan suggested it would be more appropriate if the sub-section which defined manufacturing processes was in the Bill as a separate section and the purpose of this section is to bring about that change.

Mr. Sweetman

I think it is a better method. I suppose the Minister is satisfied why each of the five things is a separate manufacturing process?

Mr. S. Lemass

I understand there was some legal reason for it but it is not very clear to me.

Mr. Sweetman

I shall come back again on it in the amendment which I have down. It really arises there more than here.

Amendment agreed to.

Mr. S. Lemass

I move amendment No. 2:—

In page 3, to delete Section 3 (2) (d), lines 43 to 47, and substitute the following new paragraph:—

(d) that, of each class of shares carrying voting rights issued by it, not less than 50 per cent. have been bona fide issued for public subscription in the State and have been made available primarily to Irish citizens or Irish companies which are managed and controlled in the State.

This amendment is again based upon a suggestion made by Deputy McGilligan during the course of the discussion on the Committee Stage, that the purpose of the section would be clarified if the wording were altered in the way in which it is here—that is to put the requirement that the shares should be offered for public subscription first, and their availability primarily to Irish citizens second. It does not change the meaning but it makes the meaning clearer.

Amendment agreed to.

Mr. S. Lemass

I move amendment No. 3:—

In page 4, Section 3 (3) (b) (iii), lines 18 and 19, to delete "the conditions set out in the said paragraphs (d) and (e)" and substitute "the conditions set out in the said paragraph (d)".

During the discussion on the Bill in Committee, I accepted two amendments which Deputy McGilligan moved to this section. He felt afterwards that the wording of the section required review, that both of the amendments effected the same purpose. I examined the effect of the amendments and I decided that he is correct. This amendment clarifies the whole position.

Amendment agreed to.

Mr. S. Lemass

I move amendment No. 4:—

In page 4, Section 4 (1), line 21, before "business" to insert "a".

This is only a drafting amendment suggested by Deputy Russell.

Amendment agreed to.

Mr. S. Lemass

I move amendment No. 5:—

In page 4, to delete Section 4 (1) (a), line 26, and substitute the following paragraph:—

(a) such company carries on business primarily for export and sales by it on the home market of each commodity in respect of which it carries on any manufacturing process are incidental only to its export trade in that commodity, or.

The House will remember that we had a rather protracted discussion in Committee on the best method of expressing the purpose intended in subparagraph (a) of sub-section (1) of this section. The section, as drafted, was intended to set out seriatim all the conditions applying to the carrying on of manufacturing operations in this country. The section makes it clear that a company which conforms to any of these conditions is entitled to engage in such a business. One of the conditions under which a company could carry on was that it was doing business solely for export. It was felt that this term was too rigid a condition and that the purpose of the legislation could be better expressed by using some such term as “primarily for export.”

However, the use of the word "primarily" instead of the word "solely" would be too vague and would not meet the particular situation we had in mind. What we had in mind was to exempt from all restrictions and regulations any company engaged in manufacturing operations primarily for the purpose of the export trade, where home market sales were only incidental. The amendment I am submitting here does define the intention far more precisely than it was defined in the original draft of the Bill. If this amendment is adopted it will be quite clear that a company which goes in primarily for the export trade, in the sense that sales by it on the home market are incidental only to its export trade, will be exempt from any restrictions or control.

Later in the Bill the term "primarily for export" is defined as a situation in which sales on the home market are not, taking one year with another, more than 10 per cent. of its average production. In so far as it was intended to put such an undertaking outside the scope of the legislation this amendment does so.

An Ceann Comhairle

I suggest that amendments Nos. 5, 6, 8, 9 and 10 call for discussion together.

Mr. Sweetman

Yes, Sir. Later on in the Bill we provide that a company which carries on business in the month of April, 1958, a company which carries on a particular type of manufacturing business, can continue to do so. Under this section we provide that a company which carries on business primarily for the purposes of export can do so. However, suppose you have a company qualified under the April, 1958, condition to do business and this company decides to go into the export trade with another line. I think that as the sections are drafted here it must be the total of all such a company's volumes of business that must be taken to decide whether the 10 per cent. condition applies or not. It should not be only the volume of business in the new export line which such a company is going into.

Take a simple case. A company makes bricks for the home market in April, 1958, and is entitled, under this Bill, to continue to do so. The volume of that company's business is £100,000 a year and it is entitled to continue doing that business. It then decides to go into the export market in relation to the making of machinery. Suppose it has prepared a very excellent brick-making machine and it decides to make that machine available to the export market and the output of that machine on the export market is only £10,000 a year. I think that the £100,000 and the £10,000 must be lumped together in deciding whether the business is primarily for the purpose of export or not. I think that the business of such a company is primarily for the purpose of export in relation to any business in respect of which it is now qualified under the Bill. I think that is what the Minister intends and I think that the more we can get existing companies into the export business the better it will be.

We certainly do not want to make it the price of going into the export market that a company should desist from an existing manufacturing process. We want to make the inducement to go into the export market as great as we possibly can. As I understand it, the Minister wants any existing business which qualifies under the Bill to be able to carry on. Surely there must not be any provision which would restrict a company such as I have mentioned from going into that export market. I think that if a company wants to go into the export market in respect of a new line in which it is not already qualified under the Act it should be enabled to do so and I do not think the section, as drafted, permits it to do that.

Mr. Norton

This Bill has not been recommitted.

An Ceann Comhairle

No, but I suggested that amendments Nos. 5, 6, 8, 9 and 10 be discussed together.

Mr. Norton

I think that this amendment makes for greater flexibility and removes the rigidity which is in the section as it stands. You have to construe amendment No. 5 in connection with amendment No. 8. I am doubtful whether the Minister is doing something which will be ultimately found to be wisdom in itself. I take it that under amendment No. 5 a company will be qualified for continued operation, provided it is engaged primarily in the production of goods for the export market and that such goods as it supplies to the home market will not put it offside for the purposes of operation, provided the goods sold in the home market do not exceed 10 per cent.? I take it that is the general intention under this Bill, as now amended?

I am wondering if it is wise for the Minister to put 10 per cent. in the Bill? It has been found from time to time— the Minister must know this—that Bills sometimes get through this House, based on the kindliest and best of intentions, which, in actual operation, are found to be unduly rigid. Some situation arises; the Bill is examined and everybody desires to meet the point raised by some manufacturer or some trading organisation; but it is found that the Bill is too rigid and it cannot be done. Every kind of tortuous mind is put on the Bill to see what way this sub-section can be got around. The most violent things are done through powers of administration and legislation in order to get over a particular difficulty which we ourselves created by making the Bill too rigid.

It may be found in actual operation that there is a very good case for a firm engaged in the production of goods for export finding it nationally advantageous and advantageous to its own operations to supply a certain quantity of goods on the home market, goods which are at present imported. If it is found that the average production and sale of these goods on the home market amounts to 12 or 15 per cent., then the company puts itself offside under amendment No. 8.

In modern legislation, so long as Parliament still has control, I am strongly in favour of enabling a Government to do things by regulation, provided there is control over the regulation. It would be a pity if the Minister were to tie this thing up in such a rigid way that the 10 per cent. could never be altered, except by the Minister coming back to the Dáil and putting a Bill through five stages here and four stages in the Seanad to alter a matter of sale on the home market by the difference of 10 per cent. or 15 per cent.

I wonder whether it would not be wiser for the Minister with this amendment No. 8 to take power to prescribe the percentage, by regulation or by resolution, which could be varied in a matter of an hour or two by a motion in the House, rather than to tie this Bill down to the position in which, once it exceeds 10 per cent., all you have to do is say to a manufacturer, perhaps doing a useful job nationally: "What you are doing is excellent but it is 10 per cent. in the Bill and we cannot do anything about it. We cannot contemplate now going back to the Dáil to make that 12 per cent. or 15 per cent."

By using amendment No. 8 as an enabling amendment, the Minister could get power to vary 10 per cent. to 15 per cent., if he wants to take it. If circumstances arise in which it is desirable nationally to make it 15 per cent., he can do it by regulation or resolution, without having to amend the entire Act. I think that is a considerable advantage these days when getting legislation through is often a difficult process and when you have a back-log of legislation awaiting attention. I commend study of that to the Minister. It does not tie the Minister down. It gives him greater freedom in the matter and at the same time, provided the regulation gets the approval of the House, it maintains a reasonable flexibility.

Mr. Russell

It was for the reasons mentioned by Deputy Norton that I put down my three amendments, on which I should like to say a few words. There is no special reason that 10 per cent. is regarded as incidental. I do not know what decided the Minister on 10 per cent. Why not 9 per cent., 11 per cent. or 12½ per cent.? When I referred to the fact that 10 per cent. might be a very big proportion of the home market, although only 10 per cent. of the export of a very big company, the Minister replied that that was one very good reason for confining the home market to only 10 per cent. I suggest, if the thing is left open on the lines of the amendment put down by me, namely, deleting the words in the original Section 4 (2) —the words after "commodity"—the qualification "incidental" would mean "the sales on the home market of every commodity in respect of which it carries on any manufacturing process are incidental only to its export trade in that commodity."

If the Minister was concerned about the definition of "incidental", I personally would be quite agreeable to adding something to that section giving him power to decide whether in fact a firm was confining its trade on the home market to a genuine incidental proportion of its total trade. I am afraid if you leave it at a rigid 10 per cent., one of two things may happen: it may be too small for the company concerned or too big for the home market and may do damage to an existing efficient home manufacturer.

You must allow some degree of sales on the home market. I understand that in the question of exports to, say, the United States, the question of tariffs enters into the export price, and these tariffs are calculated in some instances on the home market price of the commodity in question. If you export an article costing £100 invoice value to the United States, they will not base the tariff on a £100 valuation, but on the home market price, which may well be £125 or £150. Some degree of home sales for an industry engaged primarily in the export market is absolutely necessary.

In any event, from the very beginning of this Bill, as I stated here on more than one occasion, I am against this rigidity of 10 per cent. and 90 per cent. I do not think it makes for a good Bill. It would be far better to leave it at "incidental to the general manufacture" and for the Minister to take whatever power he thinks adequate to protect an efficient home producer.

In Section 4, I do not think the Minister should elaborate on the word "incidental". The original draft "and such company carrying on business solely for export" was better after changing the word "solely" to "primarily". It is a mistake to put too much in that section. That is the section we will be using to advertise the advantages of this new Bill. The simpler and more direct you make that, without any frills or qualifications, the better. Later on, any qualifications, restrictions and explanations the Minister thinks necessary could be added. That section would read far better simply as "such company carrying on business primarily for export", with nothing more than that.

Then at the top of page 5, in sub-section (2), "primarily" could be defined as meaning that the home sales

"...of every commodity in respect of which it carries on any manufacturing process are incidental only to its export trade in that commodity..."

I think the Bill would be a better Bill for that.

I quite appreciate the objections to allowing too great latitude, which may in effect endanger the whole manufacture. As against that, I agree with Deputy Norton that it is a mistake to make it too rigid, in view of the fact of this Bill going out—as I presume it will—and being sent to those with industrial potential to work manufacturing plants here. I think the stipulation of 90 per cent. will detract from the value of the Bill. That was the reason I put down the three amendments, which are inter-connected, as can be appreciated. It was to get away from that rigidity and leave the Bill open to any manufacturer who wants to manufacture primarily for export.

Another suggestion was the use of the word "mainly," but I accept that the word "primarily" may do, provided the sales on the home market are only incidental, the definition of "incidental" to be left open. Any phrase the Minister may require to put in to safeguard the home market may be put in, but should not be tied to 9, 10, 11 or 12 per cent., or any other percentage.

Mr. S. Lemass

I think Deputies are allowing themselves to be misled to some extent by reason of the fact that condition (a) is at the head of the conditions set out in Section 4 of the Bill. The position at present is that a company can engage in manufacturing operations here, provided it is a qualified company within the definition of the 1934 Control of Manufactures Act, in respect of the ownership of its shares and the nationality of its shareholders; or provided it gets a licence from the Minister for Industry and Commerce under that Act. That is the present position.

There are people who think that position should not be changed. The Federation of Irish Industries have argued that that is working satisfactorily and that there is no point in changing it at all, that so long as a company proposing to do a desirable job of manufacturing here is entitled to apply and get a licence to do it, there is no need to go further than that. I do not agree with that and I am proposing in this Bill to go beyond the position established by the Control of Manufactures Act of 1934.

One of the obvious considerations which apply is the desire to facilitate the establishment of undertakings to do export trade, but the 1934 Act was intended to deal with the position of companies manufacturing primarily for the home market. In my view, there is still a need to ensure that undertakings which are primarily concerned with the home market should be either under the control of Irish citizens or subject to some sort of examination before they are allowed to operate. It is clear that we can put outside the scope of this Bill companies concerned with export only. Our concern was to decide what is meant by the term "solely concerned with export". It was recognised that a company which was concerned solely with export might have incidental sales in the home market. Very well; we are prepared to let them do that and there is no question of their position being invalidated by reason of the fact that they do so. The position under this Bill will be that they require no licence, certificate or permit to engage in manufacturing operations, provided export is their primary objective within that definition.

In my view, it would be undesirable to leave the term "primarily for export" with a vague meaning. Indeed, most of the companies likely to wish to avail of the paragraph of the Bill would prefer to know precisely what their position will be under the Bill. I do not anticipate it is likely to give any difficulty whatever. Indeed, in the case of one company proposing to establish a new industry here, and to which I had undertaken to give a licence under the Control of Manufactures Act, 1934, they came back and said they would not need licences, as they expected to qualify under paragraph (a) and consequently would be able to carry on without any licence whatever.

Mr. Russell

Did the Minister not think the paragraph (a) company may feel that it might exceed the percentage?

Mr. S. Lemass

No. I do not think it will be a problem. Deputy Norton said we should have a situation under which a company that could not qualify, or fears it might not at some stage qualify under paragraph (a), should get a permit to manufacture by ministerial Order. That is precisely the position as the Bill stands. A company that does not wish to be limited in the scope of its operations to export only, or primarily to export, which wants to have the power to sell with greater freedom on the home market, comes under some of the other paragraphs of Section 4—assuming that it is not a qualified company, in which case, of course, it could engage in any business either home market sales or exports, without any control whatever. Assuming it is an externally-owned company, which wishes to engage in the home market or which wishes to have freedom in both the home and the export markets, then it comes to the Minister and seeks a certificate of exemption or a Control of Manufactures Act licence and it will get it provided it is decided —and it is to be an individual judgment in each case—that the effect of its development is to add to the industrial capacity of the country.

Mr. Russell

May I ask a question?

An Ceann Comhairle

The Deputy understands this is the Report Stage?

Mr. Sweetman

It is only a question.

Mr. Russell

I am seeking information. How is the 10 per cent. decided and who decides it? Do you take it in good faith; so that the industrialist does not require to go near the Department and starts to manufacture; and it is assumed that he is not selling more than 10 per cent. on the home market? Is there any check on that?

Mr. S. Lemass

I do not anticipate any difficulty on that score. The normal practice is that if some company is engaged in manufacturing operations under conditions which appear to be an infringement of the Control of Manufactures Act, then some other company whose interests are prejudiced by that development comes and reports the fact to the Department. I do not want the Deputy to think inspectors will be going round investigating the position. That is not the situation. Objection will be made when some other firm's trade is being prejudiced by reason of the fact that some company has invaded this market without being qualified under this Bill. In that case, the position will have to be examined. In 99 cases out of 100, assuming that the company is a reputable one, doing a good job and contributing to the industrial organisation of the State, if there is a problem for it in qualifying under paragraph (a) there will be no problem in making it qualify under paragraph (b) or some other paragraph.

Mr. Norton

Would the Minister answer one question? Supposing a firm is engaged in the export market primarily, exporting 95 per cent. of its products and selling 5 per cent. on the home market; and suppose some organisation comes to it and says: "We have been importing a certain commodity from such and such a country, we think now you could make it for us and we want to buy it from you in the future instead of buying in the external market," can the supplying firm say: "All right, we will take on that order"—even though it means selling 15 per cent. of their production on the home market?

Mr. S. Lemass

No. They would have to come seeking a certificate of exemption or a licence.

Mr. Norton

Is there not a good case for having greater flexibility, then, by permitting the movement of the 10 per cent. upwards or downwards?

Mr. S. Lemass

Surely the certificate or licence meets that situation, assuming it is a development we desire to have and the effect of the development will not be to put some other firm out of business. It is only in relation to the home market that we require safeguards and that is the reason why paragraph (a) appears in this Bill. There is no need for any supervision where production for export is primarily intended.

Mr. Norton

Under what other section would a promoter approach the Minister?

Mr. S. Lemass

Under (d), (c) or, of course, (g).

Mr. Norton

He has to go for a new manufacture licence.

Mr. S. Lemass

Or a certificate of exemption, or exclusion of the commodity altogether from the scope of the Bill.

Mr. Norton

It seems a rather tortuous way of doing it.

Mr. S. Lemass

Do not misunderstand the purpose of the Bill. The purpose is to ensure, in relation to production for the home market, that there will still be some supervision.

Mr. Norton

I am dealing only with the case of a company supplying goods here which were previously imported. It would be better, I think, to have more flexibility in dealing with a company like that.

Mr. S. Lemass

Surely there would be no question in such a case of giving a licence or certificate of exemption.

Mr. Norton

All this is manoeuvring under the Control of Manufactures Act. Leave it vague.

Mr. S. Lemass

I do not think that should cause any difficulty at all. I want to deal now with Deputy Sweetman's point, which is somewhat different. It seems to me the Deputy is not quite correctly interpreting the effect of the paragraph it is proposed to insert by amendment No. 7. The position is that certain companies are now carrying on manufacturing operations here. They are operating within the strict letter of the 1934 Act. They may not be able or they may not wish to conform to the conditions of this Bill; if they conform, there is, of course, no question about their position at all. To a company unable to conform or unwilling to do so, though still wishing to remain in business, we say: "You may remain in business producing the same class of goods you are now producing", but, if they want to go into any new line, then they must conform.

Mr. Sweetman

Surely the Minister would be anxious for them to go into a new line solely for export?

Mr. S. Lemass

Yes.

Mr. Sweetman

Forget the 9 per cent. or the 10 per cent. at the moment. Surely the Minister is anxious for them to go into a new line solely for export?

Mr. S. Lemass

These are companies which are externally controlled and in relation to which it is probable that, if they had sought a new manufacturing licence, they would not have got it.

Mr. Sweetman

No.

Mr. S. Lemass

I will admit there will be some cases in which the Deputy would be correct in his negative interjection, but, in the majority of cases, they are companies that have not complied with the Control of Manufactures Act and were refused a licence because it was not considered desirable to allow them to operate; nevertheless, they brought themselves into strict conformity with the provisions of the 1934 Act and started manufacturing. As far as I am concerned, I am prepared to say to them: "You can, if you wish now, alter the constitution of your company to qualify under the Bill", in which case they are free. If they do not wish to do that and wish to maintain their present unusual type of capital structure, they can still continue to manufacture for the home market the goods they are now producing. In the case of a company proposing to go into export, there would, in most cases, I imagine, be no problem at all about giving them all the necessary permits, licences or certificates to enable them to do so, but it would be clearly prejudicial to the main purpose of the Bill, which is to continue to retain powers of supervision and regulation in relation to home market operations, to grant to these companies any sort of general exemption. I can see circumstances, as the Deputy suggests, in which a company would be given the necessary authority; but to give it in a general way which would not require them to inform the Department even of what they intend to do would, I think, be unnecessary and could be in certain circumstances undesirable.

Mr. Sweetman

That is not what I suggested at all. The Minister has completely misunderstood the point I made. If a company carries on business here and is entitled to carry on business in the home market, does the Minister not wish that company under all circumstances to develop an export trade?

Mr. S. Lemass

Yes. A company will be entitled to carry on business here in the home market, provided it conforms to certain conditions. We are talking about companies that cannot or will not conform, but which are nevertheless manufacturing at the moment.

Mr. Sweetman

It affects more than the Minister thinks. It affects companies under other sections as well because paragraph (a) of Section 4 covers, as amended, the whole business of the company and not merely the particular line that is the export line.

Mr. S. Lemass

It certainly covers the whole business of the company. I admit that. I think it must do so.

Mr. Sweetman

I think it should only cover the export line, because, otherwise, you will get a restriction on export business.

Mr. S. Lemass

Again, the Deputy is over-emphasising the importance of paragraph (a). In the normal case where a company wants to sell its products in the home market, if it is an externally controlled company and not qualified under the Control of Manufactures Act, 1934, it will come looking for an exemption certificate or a licence, and I think that is a situation we should retain. No sensible Minister will refuse a certificate or a licence, if the effect of the development is to increase production. He can refuse it where he realises it will put some other firm out of business and, as I explained on the Committee Stage, I think the danger of that happening would be a deterrent to industrial development rather than a help.

Mr. Sweetman

Export business could not put anybody else out of business.

Mr. S. Lemass

No. We are talking about a company that was established to serve the home market only.

Mr. Sweetman

I am accepting the Minister's point of view in relation to that, but I am not sure that any business that is established in the home market already can under this Bill freely go into export business, without having to weigh whether going into export business will prejudice the home market position.

Mr. S. Lemass

In 99.9 per cent. of cases, that is the situation. If the Deputy is concerned only with that very small minority, externally owned, in legal compliance with the 1934 Act but unwilling to adapt their constitution to comply with the provisions of this Bill, in their case, if they want to extend their operations, a certificate of exemption or a licence will meet the position.

Mr. Sweetman

I am not certain that the Minister is right in his interpretation of the legal effects of the Bill, quite apart from my disagreeing with him on the principle. I do not think it covers that.

Mr. Norton

May I ask the Minister one question on amendment No. 8? For the purpose of ascertaining the sales on the home market, the mechanism is that you take one year with another. Does that mean a calculation over two years or ten years or 20 years?

Mr. S. Lemass

It is intended to convey that we are not going into percentages of a decimal point. It is merely to give an indication to the company of what we consider production primarily for export will involve.

Mr. Norton

May I give a case? Suppose a firm, this year or next year, produces and sells on the home market 12 per cent. and the following year sells another 12 per cent. both being above the prescribed 10 per cent., can it say to the Minister: "That is too bad. We are sorry we went that far but, in the next five years, we will bring it down to 9 per cent"?

Mr. S. Lemass

That is right.

Mr. Norton

Can it indent on a future five years or ten years?

Mr. S. Lemass

I would say so, in certain circumstances. Provided examination showed that it was doing no harm to anyone else by expanding sales here, you might say: "O.K. but is not the obvious course to adopt to apply for a certificate of exemption and take complete freedom?"

Mr. Norton

Under that interpretation, you could do what you like under the Bill. If the Minister had told us that at 10.30 we could have saved 50 minutes.

Mr. Sweetman

It is obvious that a company might want to have a different set of rules in the first year, for example.

Amendment agreed to.

Amendment No. 6 not moved.

Mr. S. Lemass

I move amendment No. 7:—

In page 5, Section 4, between lines 5 and 6, to insert the following new sub-section:—

(2) (a) This sub-section applies to a company which for the time being complies with the conditions set out in paragraph 2 of the First Schedule to this Act.

(b) Where a company to which this sub-section applies sends to the Minister, before the appointed day, a statutory declaration, signed by all its directors, stating that on the 1st day of May, 1958, or within one month immediately preceding that date it carried on a particular manufacturing process in relation to a particular commodity, then, notwithstanding anything in Section 9 of the Act of 1934, it shall be lawful for the company to continue, on and after the appointed day, to carry on such manufacturing process in relation to such commodity.

Deputies will remember that we discussed the position of these £100 companies, as they were called, during the Committee Stage and that the Bill as originally introduced required these companies to bring themselves in future, after a lapse of a year or possibly longer, into conformity with one or other of the paragraphs of Section 4. It was argued that it was undesirable to have any retrospective provision in the Bill and I accepted that. Therefore, I am proposing here that any of these companies that does not wish to bring itself into compliance with any of the paragraphs of Section 4 can, nevertheless, remain in operation in respect of the types of goods that it is now producing. It is necessary, however, that some record of them should exist because one could see circumstances arising in five or ten years' time where undesirable developments might be permitted by reason of the absence of information regarding the scale of the activities of any of the companies of this kind and, therefore, the section provides that they can secure that exemption from the need to comply with any of the paragraphs of Section 4 by the process of making a statutory declaration of their existence and of the type of goods they are producing and then, in respect of these types of goods, they are exempted from any further compliance with the conditions of the Act in the future.

Mr. Sweetman

I suppose it is correct technically to say that a statutory declaration is signed. I thought it was always "made".

Mr. S. Lemass

Yes.

Mr. Sweetman

I thought "made" was always the word.

Mr. S. Lemass

I would bow to the Deputy's superior legal knowledge but I am not responsible for that end of it. I think that term must have been used regularly in other enactments.

Mr. Norton

May I ask the Minister whether it is intended to bring to the notice of all companies, by advertisement or otherwise, the fact that this provision will exist in the Act because, under this section, a company is required to give notice before the appointed day? Some people may not know that they are affected by a Bill of this kind, which is a pretty complicated measure in many respects. Is it intended to invite the attention of companies to the provisions of this kind, and other sections perhaps, so that they will be on notice that they must do certain things before a certain date?

Mr. S. Lemass

Ignorance of the law is no alibi but I think that that may be necessary.

Mr. Norton

People might possibly put themselves offside by not complying within a certain period.

Mr. S. Lemass

I do not think there would be many cases. We are removing from the control of manufactures altogether companies with fixed assets of less than £5,000 in value so that all these small companies are being put outside the Act anyway.

Mr. Norton

It is necessary for a company to do certain things lawfully to carry out a manufacturing process.

Mr. S. Lemass

I think we will take some measure to draw that obligation to the attention of people who are likely to be interested.

Mr. Sweetman

I move amendment No. 1 to amendment No. 7:—

To delete "particular" where it occurs in paragraph (b).

The amendment that I have deals with two points. The first one is to delete the word "particular" where it refers to a manufacturing process. It is purely a matter of drafting. I want to get some information from the Minister as to what the interpretation of his amendment is. Does "particular manufacturing process" mean that the company concerned cannot introduce any improvement in the process for manufacturing the particular commodity? As I understand the situation, I can see the Minister's intention in relation to confining the commodity by the word "particular" but surely it is unnecessary to restrict the process.

Mr. S. Lemass

"Manufacturing process" is defined.

Mr. Sweetman

I know "manufacturing process" is defined but "a particular manufacturing process" is different. We have had a definition of "manufacturing process" in amendment No. 1 and it says "the making, by the use of mechanical power, of a commodity". I am a little bit worried that it might mean a restriction to the exact type of machine in operation and if the Minister assures me that he has been assured, from a drafting point of view, that it does not, I am perfectly happy.

Mr. S. Lemass

I think it is quite safe. It is quite clear that it is the making, altering, ornamenting or finishing that is covered. The actual process does not matter.

Mr. Sweetman

Then I am quite happy. The other point is this: I know of one particular case where a company had placed orders to make, and have made, a prototype of a new form of machine that it is anxious to manufacture here and sell in the United States of America. It had actually, itself, not started the manufacture of this machine before 1st May but it got the prototype manufactured by another contractor while it was altering its premises. The alteration of the premises is not quite finished yet and it will not be finished even before the Bill is enacted. What I am anxious to provide is that where reasonable steps have been taken to expend money on the initiation of a new line of country, where the declaration is filed showing that such reasonable steps have been taken, that the money was being expended before we had this discussion, on 1st May, 1958, the company would not be prejudiced.

Mr. S. Lemass

Normally, I think such a case as the Deputy mentions would be met without any difficulty by the issue of the necessary licence or certificate. It would be very undesirable to have any element of vagueness as to operations that a company was doing—a company of this kind, at this time. As I said before, we have to be thinking in terms of some Minister administering this Act, say, ten years hence and I would not like to see a situation where people who were proposing to do something that everybody thought was undesirable could, nevertheless, get themselves the legal authority to do so by the simple process of acquiring some of these companies which could claim to have had the intention of doing something but which it was not actually doing.

Mr. Sweetman

Surely everything that is done for export is desirable?

Mr. S. Lemass

Certainly, and there will be no difficulty about getting permission to do it and that would appear to be the more desirable procedure.

Mr. Sweetman

It can only arise in a very trifling number of cases.

Mr. S. Lemass

I would not like to have any vagueness about this section.

Mr. Sweetman

I accept the Minister's assurance. There can be only a trifling number of such cases.

Mr. Russell

Do I understand the Minister to say, in reply to Deputy Sweetman, that "a particular manufacturing process" is the same as those set out in his own amendment No. 2?

Mr. S. Lemass

Yes.

Amendment No. 1 to amendment No. 7, by leave, withdrawn.

Amendment No. 2 to amendment No. 7 not moved.

Amendment No. 7 agreed to.

Mr. S. Lemass

I move amendment No. 8:—

In page 5, to delete Section 4 (2), lines 6 to 14, and substitute the following sub-section:—

(2) Sales on the home market by a company, which carries on business primarily for export, of a commodity in respect of which it carries on any manufacturing process shall, for the purposes of paragraph (a) of sub-section (1) of this section, be deemed to be incidental only to its export trade in that commodity, if, taking one year with another, the quantity of that commodity sold by it on the home market does not exceed 10 per cent. of its total output of that commodity.

Amendment agreed to.

Amendments Nos. 9 and 10 not moved.

Mr. S. Lemass

I move amendment No. 11:—

In page 9, First Schedule, Part I, paragraph 1 (2) (a), line 32, before "a company" to insert "a person who is or two or more persons each of whom is then either a qualified (1934 Act) person or".

An Ceann Comhairle

Amendments Nos. 11 and 12 may be taken together.

Mr. S. Lemass

This point was raised in Committee also. Under paragraph 1 (2) of the First Schedule shares of the qualified holding (B) company, that is a subsidiary holding company, must be held in the required proportion by a qualified holding (A) company. It was pointed out that the shares should be held partly by individuals and partly by a qualified holding (A) company and the object of amendments Nos. 11 and 12 is to deal with that situation. The point, I think, was raised by the Industrial Credit Company during discussions.

Mr. Sweetman

There is a point which, perhaps, could be raised on this which has been brought to my attention since the last stage, that is the case where a pretty substantial minority holding in a company was held by a qualified person under the 1932 and 1934 Acts. That substantial holding brought the company within the terms of the 1934 Act as an Irish qualified company but the shareholder concerned died. The beneficiaries under his will were not qualified persons and there does not seem to be any possibility of getting any other Irish person to come in and take this holding, which is about £50,000. Nobody would be likely to put that much money in a minority holding.

I know there are provisions by virtue of which under the will certain persons can be deemed to be qualified because they are receiving them under trust and so on, but it does nevertheless create a difficulty where a company was completely qualified and suddenly that qualification collapses because of the death of one of the Irish qualified people who had a substantial holding in it. His executors have to try to find somebody to take over that share-holding and that business. A share-holding of the size I have in mind is not one that would be taken over as an ordinary investment. It would be only taken up by a working partner. I cannot see how one could avoid the difficulty unless there was some method of ensuring that after death the terms for qualification were different. The qualification that it would only arise after death would prevent any avoidance of the ordinary law. It would be very cumbersome to do it.

In the case about which I have been told—it is not a case on which I am personally engaged legally but about which a fellow solicitor has told me— I cannot see any possibility of their being able to get an Irishman to put £50,000 into this company because a person would put that amount of money into a company only if he was working personally in it. I do not think there is anybody here likely to be possessed of that amount of money and the necessary qualifications to do the job. This is an example of how restrictive legislation of this sort can land one in difficulties which were not visualised. I do not know whether the Minister has met other similar cases and whether it could be met by a licence or by an exemption but it does seem to create a problem that must be met or else the particular business will have to fold up.

Mr. S. Lemass

The Deputy is, of course, talking about a private company?

Mr. Sweetman

Yes.

Mr. S. Lemass

In the case of a private company I do not see how that could be met except by the issue of a Control of Manufactures Act licence to the company if because of the passing of shares to an unqualified person the company had got itself outside the scope of the Act.

Mr. Sweetman

I cannot see any other way.

Amendment agreed to.

Mr. S. Lemass

I move amendment No. 12:—

In page 9, First Schedule, Part I, paragraph 1 (2) (b), line 37, before "a company" to insert "a person who is or two or more persons each of whom is then either a qualified (1934 Act) person or".

Amendment agreed to.

Amendment No. 13 agreed to

Bill, as amended, received for final consideration.

An Ceann Comhairle

Next stage?

Mr. Sweetman

Next Tuesday, if you do not mind. Some of our Deputies are engaged in the Public Accounts Committee meeting.

Mr. S. Lemass

The Deputy will appreciate that the Seanad will be meeting to take this Bill and one other. I should like the Seanad to get the opportunity of having the final copy circulated so that they will not raise any question about not having time to consider it.

Mr. Sweetman

You cannot circulate it until it is passed. We can take it as first business on Tuesday next.

Mr. S. Lemass

Yes.

Fifth Stage ordered for Tuesday, 13th May, 1955.